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Kwasi Kwarteng Admits Mini-Budget Caused “A Little Turbulence” As He Seeks To Reassure Tory MPs

Kwasi Kwarteng sought to calm the markets after his fiscal statement last month caused economic turbulence (Alamy)

4 min read

The Chancellor Kwasi Kwarteng sought to reassure Tory MPs and the financial markets over the government’s fiscal policy after he U-turned on scrapping the 45p tax rate.

Speaking at the Conservative Party conference in Birmingham, he admitted his fiscal statement outlining a raft of tax cuts and extra borrowing to pay for them had caused “a little turbulence”.

But Kwarteng sought to paint the Tories as still "serious custodians of the public purse”, and promised to outline plans to cut down government debt in the medium term in a statement on November 23.

Opening his speech this afternoon he said: "What a day! It has been tough but we need to focus on the job in hand.”

He added: "We need to move forward. No more distractions. We have a plan and we need to get on and deliver it.

"That is what the public expect from the Government.”

Earlier today Kwarteng was forced into a humiliating climbdown as he confirmed the announcement to scrap the top rate of income tax would not be going ahead after a rebellion from senior Conservative MPs.

He attempted to move past this in his address to party members, saying he refuses to accept "it is somehow Britain's destiny to fall back into middle league status,” citing the Industrial Revolution as evidence that “absolutely anything is possible”.

The Chancellor added: "We have great ideas, we have the same inspirational people and I know we have the same determination.

"Our growth plan set out 10 days ago will ensure we focus relentlessly on economic growth. Because we must face up to the fact that for too long, our economy has not grown enough.

"The path ahead of us was one of slow, managed decline. But I refuse to accept that it is somehow Britain's destiny to fall back into middle league status or that the tax burden reaching a 70-year high is somehow inevitable.

“It isn't and it shouldn't be.”

Kwarteng said the UK "needed a new approach" and that economic growth is the only way to "spread opportunity and prosperity”.

He defended the Government's tax-cutting agenda, repeating that the national insurance rise s been reversed, as well as srapping a rise in corporation tax planned for next year, and cutting the lower rate of income tax, saying it is not “radical” or “irresponsible”.

“We were faced with a 70-year high tax burden. We were confronted with low growth and the path we were on was clearly unsustainable,” he said.

“So, that's why we're cutting taxes for working people."

But he accepted that his plans outlined in last month’s fiscal statement caused “a little turbulence”, after the pound crashed and the Bank of England was forced to step in and prop up ailing pensions markets.

"I get it. I get it” the Chancellor said. “We are listening and have listened, and now I want to focus on delivering the major parts of our growth package."

He concluded by criticising Labour's economic plans, saying at their party conference last week they only offered “the same old ideas: re-nationalisation, empty slogans, no plan for growth”.

But responding to Kwarteng’s speech the shadow Chancellor Rachel Reeves MP said it showed "a Chancellor and a Tory government completely out of touch, with no understanding on its own appalling record on growth".

She said: "What the Chancellor called a little financial disturbance is a huge economic body blow to working people that will mean higher prices and soaring mortgages. That's the Tory economic premium.

"This is an economic crisis made in Downing Street, paid for by working people.”

Accusing the Chancellor of damaging the UK's reputation on the global stage, Reeves called on Kwarteng to  “reverse this Budget and abandon their discredited, dangerous trickle-down approach”.

Liberal Democrat Treasury spokeswoman Sarah Olney said: "Laughing about the turbulence caused by this botched budget is an insult to the millions of people already facing spiralling mortgage costs.

"Kwasi Kwarteng's fiscal failure saw the economy tank and mortgage rates go through the roof, his words will bring cold comfort to struggling families and pensioners."

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